Financial institutions, which give factoring of service refer to as the factor as firms. They are created by the largest banks (or banks carry out functions the factor of firms), that provides high reliability factoring of the bargains and minimal costs for the clients. The ramified network of the specialized branches for factoring of service of the enterprises in the various countries is created by large national corporations.
Usually participate in operation factoring three persons: the factor - buyer of the requirement, initial creditor and debtor who has received from the client the goods with a delay of payment.
The operation factoring consists that factoring the department of bank buys the debt requirements (account of the invoice) client on conditions of an immediate reimbursement up to 80 % of costs of deliveries and payment of other part, minus percent for the credit and commission payments. If the debtor does not pay in time account factoring, payments instead of it carries out factoring a department.
Factoring as the service is most effective for the small and average enterprises, which traditionally test financial difficulties because of delayed repayment of duties and limitation of sources, accessible to them, of crediting.
At the same time not any enterprise concerning a category small or average, can take advantage of services factoring of the company. So, factoring to service isn’t a subject:
- the enterprises with a plenty debts expresses each of which by the small sum;
- the enterprises engaged in manufacture non-standard production;
- building and other firms working with the subcontractors;
- the enterprises realizing production on conditions of service, practicing compensatory bargains;
- the enterprises concluding with the clients the long-term contracts and the exposing accounts after end of certain stages of works or up to realization of deliveries (advance payments).
Factoring of neither operation nor are made under the liabilities of the physical persons, branches or branches of the enterprise. The similar restrictions are caused by that in the specified cases factoring of the company the credit risk is difficult enough to estimate or is unprofitable to incur raised amount of works, and also the additional risk arising at of such Requirements, which payment can be not made in time owing to default by the supplier of any contractual obligations.
Besides it, the supplier should make the goods or render service of high quality, have prospects of fast expansion of manufacture and increase of the profit (only in this case to enterprise it will be favorable to pay high enough cost of services factoring of the company) and especially temporary reasons of shortage of money resources - because of delayed repayment of duties, and also insufficient profit level, excessive commodity stocks and difficulties connected by production.
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